GBPUSD Teases 1.33 Handle over Dovish US Macro Data

The British pound has posted gains in Wednesday trade, erasing the losses seen on Tuesday. In the North American session, GBP/USD was trading at 1.3287, up 0.26% on the day. On the release front, U.S numbers were mixed. U.S Preliminary GDP came in at 2.2%, just shy of 2.3%. However, ADP nonfarm payrolls dropped sharply to 178 thousand well below the estimate. This along with a better than expected GFK Consumer Confidence data in UK resulted in the pair trying to gain ground against the US greenback. The pair has managed to breach 1.33 price levels during early Asian hours on Thursday and is currently trading around 1.3316 showing signs of consolidation over 1.33 handle.

GBPUSD Choppy

A lack of bullish confidence is likely still present, as the GBP rebounds against the Dollar in conjunction with broader market sentiment. Fears over Italy heading into a new round of elections and disrupting stability in the Eurozone have ebbed for now, and risk appetite has stepped back into the markets. UK Calendar is set to see a small collection of data release scheduled across the day. The release kicks off with the Nationwide Housing Prices measure for the month of May dropping at 06:00 GMT, with the YOY figure expected to tick up slightly from 2.6% to 3.0%. After that, at 08:30 GMT there are multiple releases with April’s Consumer Credit forecast at £1.63 billion, Net Lending to Individuals forecast at £5.2 billion, and Mortgage Approvals for April forecast at 63 thousand. In US calendar, Investors await Pending Home Sales data for April and Crude Oil Inventory data.

When looking at the pair in technical perspective, the outlook for GBP remains broadly bearish however volatility is expected to increase in early Jun as Parliament votes on Brexit legislation following the heavily amended passage of legislation. The risk remains skewed to the downside as in the 4 hours chart, the pair is unable to surpass its 20 SMA moving in parallel with line. For GBP to gain significant gain upper hand and remain bullish the pair needs to gain momentum based on Sterling’s strength rather than Greenback’s temporary weakness. Expected support and resistance for the pair are at 1.3245 / 1.3200 / 1.3160 and 1.3350 / 1.3385 / 1.3420 respectively.